Author: CP

Bharat Forge’s consolidated net profit, adjusted for forex losses and extraordinary items grew just 1.3% YoY and declined 15.7% QoQ at Rs 729mn, which was below expectations. Consolidated sales grew 28.8% at Rs 13.5bn, but EBITDA grew just 9.2% YoY and declined 5.2% QoQ at Rs 1.94bn. Margins declined 20bps YoY and 120bps QoQ at 14.4%. Disappointment came from both, domestic and subsidiary performances.

Expect company to revert to decelerating EBITDA and declining profits over the next year on slowing sales, contracting margins and higher fixed costs. Our estimates factor on-time commissioning of non-auto facilities, which is expected to partially offset slowdown in auto sales. (more…)

In a somewhat bold move, Kotak Securitis Analysts have come forward and downgraded Reliance Industries Ltd to “REDUCE” from “ADD” due to earnings risk with cyclical downturn in chemical and refining turning out to be worse than expected. Adding to Ambani’s woes is the sharp contraction in refining and chemical margins in recent weeks.

The report said that implosion in demand, reduced operating rates and ample supply as indicator of weaker-than expected commodity cycle. (more…)

Nestle reported net sales, operating profit, and adjusted PAT growth of 22%, 8.5%, and 11.4%, respectively, which compares with our expectations of 20%, 18%, and 19% growth, respectively. Domestic FMCG growth was robust at 23% during the quarter. Nestle reported a 250bp decline in GPM due to a steep increase in prices of key commodities like milk solids, green coffee, vegetable fats, wheat flour, and sugar.

The calibrated price hikes taken by Nestle could only partially offset the cost pressures being faced by the entire FMCG industry. (more…)